Broncos add insurance language to Peyton Manning’s contract for 2014

No big whip. The Broncos altered some language in the contract of quarterback Peyton Manning so that the team has a little more insurance in case of injury for the 2014 season.

Manning’s financial terms were not altered nor did the Broncos receive any salary cap adjustment. He will still draw a $20 million salary this season and $20 milion in 2014. He also has slated to receive a nonguaranteed $19 million in 2015 and $19 million in 2016.

The Broncos are about $7 million below the salary cap.

By changing the language, the Broncos had to report Manning’s contract as a transaction and it’s listed as a restructuring. It’s just not the type of restructuring that involves financial terms. Adding insurance to multiyear contracts is a practice available to all major sports teams. The Broncos just chose to utilize it because, well, it makes sense for the team to protect owner Pat Bowlen’s player investments.

“Waiting for a moderator” to approve my other comment with a link to ProFootballTalk’s story on this, but here’s the real gist of it from PFT: ”

“PFM’s new contract doesn’t change the money or the cap number, in any way….the renegotiated contract contains a clause acknowledging that the
Broncos have purchased insurance to protect them against a serious
injury to Manning. The contract must mention the insurance in order to
position the Broncos for a cap credit, if they ultimately collect on the
policy… the Broncos will get $10 million if Manning suffers an injury
(other than to his neck) in 2013 that prevents him from playing in
2014. If it’s an injury to the neck, Manning’s $20 million guarantee in
2014 evaporates, making the insurance unnecessary. Basically, then,
Manning will get the full $20 million for any non-neck injury in 2013
that prevents him from playing in 2014. The Broncos, in turn, will get
half of it back via insurance.”

What’s strange is the “cap credit”..seems like a salary cap “loop hole”? Why wouldn’t every team take out this insurance on ALL of their big guaranteed contracts to prevent dead money due to injuries? As one of the commentators at PFT said, seems there should be a cap “hit” this year for the insurance premium amount, if a cap credit could be realized later on.

Mike Klis has been with The Denver Post since 1998, after working 13 years with the Colorado Springs Gazette Telegraph. Major League Baseball was Klis' initial passion. He started covering the Colorado Rockies after Coors Field was approved for construction in August 1990.

Nicki Jhabvala is the Sports Digital News Editor for The Denver Post. Before arriving in Denver, she spent five years at Sports Illustrated working primarily as its online NBA editor, and she was most recently the overnight home page editor at the New York Times. She has reported regularly on the Broncos since joining the staff.

A published author and award-winning journalist, Benjamin Hochman is a sports columnist for The Denver Post. He previously worked on the staff of the New Orleans Times-Picayune, winners of two Pulitzer Prizes for their Hurricane Katrina coverage.